Chad Ogden is a guy whose roots are in the floor covering industry; he basically grew up in the retail end of the business. After developing skills in the technical arena, he launched a company that specialized in software aimed at improving the lot of floor covering retailers. QFloors is now celebrating its 20th year, which provided an opportune time to sit down with Chad and get some insight into the changes industry-specific software has made and is making in the retail community and in the industry in general. Following are some excerpts of that conversation. The entire interview can be found on the Floor Trends’ website at floortrendsmag.com.
TalkFloor: Your company has been busy lately, as have other industry-specific software providers. Do you feel this is a sign of retailers upgrading across the board, perhaps upgrading their sales floor, becoming more involved in digital marketing, or making other structural changes?
Ogden: You bring up some good points here. We’re talking about operational changes that are taking place, how companies conduct their daily work, how orders are taken and processed, how payments are secured, how products to fulfill those orders are processed—not to mention issues involving inventory. Then you have the other side of that, which is maybe more of a strategic marketing task. There are products out there that help with both sides of that equation. On the marketing side, there are software products that are traditionally called CRM or customer relationship management, lead management products, and estimation products that many retailers are using. There are software products that help retailers better manage these functions. It’s a lot easier to add these functions to an operation where the core operations of a floor covering company is being managed properly. On the marketing side, pieces can be added here and there without changing the day-to-day operations. When you start talking about the day-to-day operational changes, that calls for a major change within the company, and that takes a major commitment. It takes a decision and commitment to do it because it affects almost everyone in the company. And everybody in the company has to make a change as to the desired result as to how they do their day-to-day business.
TF: The estimate by many in the industry is that there are about 10,000 independent retailers out there. Prior to the recession, estimates were that there was about double that amount. Looking down the road about five, six or eight years, somewhere in that range, I have heard people estimate that that number will diminish perhaps by half. What are your thoughts as to how this situation is viewed within the retail community?
Ogden: You are correct. In 2006 and 2007 there were more retailers out there than there are today. Estimates are that 20% to 25% of independent retailers went out of business between 2007 and 2012. There was a weeding out of retailers at that time and the operations that were not strong and that were not running good businesses operationally were weeded out. We have learned that only 3% of retailers that were using QFloors went out of business during that 2007-2012 period. I’m not saying that it was all QFloors, but I think it has something to do with the fact that they have established a model for a way of doing business that was very systematic and streamlined. If a retailer is using technology, their business will be a great deal more streamlined, which means the retailer can do more business with less overhead, with fewer people, and use the people they have to drive more business. That is what is going to make retailers more profitable.
TF: From what you’re saying, when retailers make a switch to industry-specific software, yours or any other, they are basically saying that in these times, to conduct business in this industry with competition from the big box players and the others, I’m going to have to update across the board.
Ogden: That’s right. If you stay with what you were doing 20 years ago, that will catch up with you. Let’s take a $1 million store with three or four employees that’s using QuickBooks. In order for that business to go to $2 million and be able to handle that additional business, they’re going to have to add one to two people to their organization if they continued doing things according to their current procedures and software. With industry-specific software they can get to $2 million without adding another person.
TF: Is it your observation that many retailers make these changes including industry-specific software because they’re threatened, they see what’s happening, and they think it could really cost them in a major way?
Ogden: I think many 50 and older retailers don’t see this as a threat. I honestly think that the way they have all been doing things all along has worked for 30 years or so and will continue to work. Let me jump in here and say that this is a generalization and not everybody in that generation feels this way. There are many more forward-thinking retailers that obviously are not going to say that.
But of the people that I do think are comfortable going forward with business as usual, it’s usually an age thing. If I am talking to people 25 to 30 years old, they definitely understand that the traditional way is not going to work for them. There is a definite correlation to age and an increasing of urgency to get software that’s going to help them run a better and more efficient operation.
TF: Are you seeing many of the changes in management techniques taking place in established businesses, or as a result of younger people coming in to manage the business?
Ogden: Absolutely. Younger people, when they get into management positions, are pushing the older generation to reconsider these changes. But we often get pushed because it’s often scary for the older generation because they don’t fully understand it. The upcoming people aren’t afraid.
TF: Do you have a feel for some of the advances your clients have made other than with your software? I’m wondering, for example, about changes in digital marketing.
Ogden: Yes. I can give you a personal example. My father started a retail floor covering store here in the Salt Lake area in 1974. They now have 12 locations. Their main type of advertising and marketing has always been TV and radio. They were one of the first organizations in this area to actually experiment on TV on a regular basis, and it made the chain grow very rapidly. Forty years later, when my dad has stepped back somewhat and other family members with a different viewpoint became more involved in the company, they no longer advertise on TV and they are putting a major part of their budget into digital marketing. They’re getting experts involved as well as educating themselves and hiring younger people. This is because they are continuing to be successful, but they’ve had to move away from what worked yesterday. And if they hadn’t done that, they would have gone out of business.